Posts Tagged Fannie

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ANSI Z765-2021 Resources for Appraisers

1004MC or 1004 ANSI

By Ann O'Rourke on February 25, 2022 / ANSI, appraisal forms, liability, real estate market / Leave a comment

Tags: ANSI, Fannie, liability, real estate market

1004MC or 1004 ANSI

By George Dell, MAI

Excerpt: The 1004MC “market conditions” appraisal addendum was created by Fannie Mae and Freddie Mac to require a form-based market analysis. This added to the traditional practice to collect a handful of ‘comps’ to opine and foretell market price. There are problems and unintended consequences.

The ANSI requirement is that residential appraisers measure houses according to the ANSI (American National Standards Institute) method. This constraint can have good long-term results for consistency, if it is adopted by the full universe of participants. The requirement would have to include tax assessors, building permit agencies, real estate agents, investors, insurance companies, architects, contractors, and unlicensed appraisers. This part might take years, if ever.

We can take a quick look at some similarities, some differences, and where things may go…

To read more, click here

My comments: George and I talked about this and agreed to disagree. He is not the only one with doubts about ANSI. Most are appraisers, like George, who have never used it. I finally found a somewhat negative post about ANSI, instead of social media rants ;>

My opinion: This Standard is better than no standard. Appraisers have been using ANSI since 1996. I did not hear about problems with using it or with lender clients. Change is hard.

See the end of this newsletter for info on Appraisal Institute’s New 4 hour online ANSI class and an excellent ANSI webinar this Monday with Lyle Radke from Fannie being grilled by three appraisers! Two of them had negative comments.

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Neighborhood Boundaries for Appraisals

By Ann O'Rourke on January 28, 2022 / adjustments, ANSI, appraisal classes, appraisal how to, bias / Leave a comment

Tags: adjustments, ANSI, appraisal how to, bias, Fannie, mortgage lending

Gentrification, neighborhood boundaries, and bias

By Ryan Lundquist

Excerpts: Photo used with permission (thanks, Vicky).

Sometimes, crossing the street can make all the difference for value. In short, if we don’t understand where a neighborhood starts and ends, we might choose the wrong comps.

Q&A #3 How do we know neighborhood boundaries?

Okay, this is a big question, and it could easily be a dissertation. For starters, let’s consider what Fannie Mae says about neighborhoods:

Fannie Mae: “The appraiser should provide an outline of the neighborhood boundaries, which should be clearly delineated using ‘North,’ ‘South’, ‘East,’ and ‘West’. These boundaries may include but are not limited to streets, legally recognized neighborhood boundaries, waterways, or other natural boundaries that define the separation of one neighborhood from another. Appraisers should not reference a map or other addendum as the only example of the neighborhood boundaries.”

Other thoughts (mine): I think sometimes we focus only on major streets, but let’s also consider school boundaries and even how neighborhood associations or city websites define areas. But also, where would residents themselves draw the lines? And where would buyers be hunting for a home before shopping somewhere else? All these things could be clues.

To read more and see lots of maps and graphs, click here

My comments: Excellent analysis of specific neighborhood boundaries with maps and graphs, of course. Worth reading. The Jan. and Feb issues of the monthly Appraisal Today has this article: Does my neighborhood really need to be analyzed? Parts I II By Tim Andersen, MAI. The best neighborhood explanations I have ever read!!

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Appraisal Completion Certifications – be careful

Desktop appraisals okay for some Fannie Loans March 2022

By Ann O'Rourke on January 21, 2022 / ANSI, appraisal business, appraisal forms, appraisal how to, bias, desktop appraisals, Fannie, liability, square footage / Leave a comment

Tags: ANSI, appraisal business, appraisal how to, bias, desktop appraisals, Fannie, square footage

Desktop appraisals okay for some Fannie Loans March 2022

Fannie announcement – About Desktop Appraisals

Beginning in March 2022, desktop appraisals will be an option for some loan transactions. This fact sheet provides high-level information on Fannie Mae’s requirements for desktop appraisals and answers some frequently asked questions. We’ll be adding information to the fact sheet, such as additional FAQs as needed.

Excerpts:

Use Form 1004 Desktop
Must include floor plan with interior walls.
The appraiser must have sufficient information to develop a credible report.

To read the fact sheet, click here

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Desktop Appraisal to Become the New Norm

by Isaac Peck, Editor, WorkingRe

Note: This article was written before the Fannie announcement above.

Excerpts: A number of questions remain regarding how the GSEs will establish the eligibility criteria for what types of loans, transactions, and loan-to-value (LTV) ratios will qualify for these desktop valuations. For example, Thompson’s comments that such a move will provide relief on rural appraisals runs contrary to most conventional appraisal experience in the industry where appraisal waivers, hybrid appraisals, and other “alternative” valuation products have primarily been used in cookie-cutter, tract home neighborhoods where model-match comps are more readily available.

In fact, over the years many senior executives at the GSEs and at major lending institutions have acknowledged the need for traditional appraisals on rural properties—which are much more likely to have unique features and require more complex analysis.

There is also the question of whether the introduction of desktop appraisals will potentially lead to a broader range of alternative appraisal products into the mix. Given that some senior executives at Fannie Mae were predicting that hybrid appraisals would become mainstream by 2022, it is actually a little surprising that desktop appraisal assignments are the first alternative product to get a permanent place on the GSE’s valuation roster. Appraisers will just have to wait to see what the future holds!

To read more, click here

My comment: Interesting and worth reading about the background of Fannie’s change

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Appraisal Obsolete? Now or in the Future?

By Ann O'Rourke on January 14, 2022 / ANSI, appraisal business, Fannie / Leave a comment

Tags: ANSI, appraisal business, Fannie

Is Appraisal Obsolete?

By George Dell

Excerpts: You’d think client/user expectation would follow wise professional leadership. Hah!

Innovation and leadership in knowledge and education has declined. The profession and its key organizations have long lost their default position. Pride in designations are diminished. Replaced by licensing, outdated appraisal processes, echoed education, and octopus-like regulation. These are built upon subjective, belief-based ‘credibility’ standards. Each of these re-reinforce what clients want and expect. Why?

USPAP (Uniform Standards of Professional Appraisal Practice) is edited every two or three years. New updates may simply undo prior updates. Chugga chugga.

Appraisers are required to repeat the same education and repurchase the USPAP book every two years, even when changes take place over a three-year period. And pay fees for the privilege. “Automated valuations,” “evaluations,” and “waivered” ways do not have such taxes and ‘regulatory guidance.’ This creates a market advantage for the lesser-quality product!

To read more, click here

My comment: I agree, unfortunately. I love the use of “octopus”: very descriptive

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Three 2022 Residential Appraisal Forecasts

By Ann O'Rourke on January 7, 2022 / ANSI, appraisal, Fannie, forecast, UAD / Leave a comment

Tags: ANSI, appraisal, bias, Fannie, forecast

Three 2022 Residential Appraisal Forecasts

The 20 appraisal events that will surface, occur or continue on into 2022

By Tim Andersen, MAI

Excerpt of three of the Events:

6. So far, appraisers have not organized themselves to fight the bogus bias and discrimination charges against them. Despite the need for such pugilistic organization, however, the status quo won’t change.

9. More and more state appraisal and taxing authorities will recognize Fannie Mae’s move to use the ANSI measurement standards by adopting those standards themselves. While this is likely a positive step, it will result in another level of regulation and standards imposed on appraisers.

10. State appraisal boards will continue their migration toward becoming consumer advocacy agencies; thus, their migration away from their original purpose, the credentialing, educating, and disciplining of real estate appraisers.

Warning: some are very controversial!

To read all 20, click here. I posted this on my blog, so you can make comments!

Appraisal Completion Certifications – be careful!

By Ann O'Rourke on December 31, 2021 / Fannie, future, lender appraisals, liability / Leave a comment

Tags: appraisal, Fannie, Fannie forms, forecast, square footage

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ANSI Z765-2021 Information Resources – CLICK LINK BELOW FOR MORE

Measuring Bi-level homes square footage

Fannie requiring ANSI for appraisals starting 4/1/22

By Ann O'Rourke on December 24, 2021 / Fannie, FUN, humor, square footage / Leave a comment

Tags: Fannie, humor, square footage, zillow

ANSI Update

I have been getting questions from appraisers but did not have time to research this Very Hot Topic. Below is a link to purchase the new 2021 Standards.

There are lots of comments online. The first link below by Appraisersblogs allows comments which you can read and make your own comments. The second link is a short blog post by McKissock.

Purchasing the Standards document for $25 is a good idea—link at the end of this section. I purchased a copy, so I knew what it said. Hopefully, most appraisers who do GSE appraisals will get a copy. Disclaimers coming soon regarding ANSI, assessor’s offices, etc. Disclosure of what you use is an excellent idea.

For many years, I did relocation appraisals, where 2-3 appraisers appraised the same house before the sale. Sq.ft. by the appraisers was very seldom the same. We did future values, typically 90-120 days in the future. My most favorite appraisals. Every appraisal was a test of how close I came to the sales price.

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ANSI Measuring Standard Required on April 1, 2022 – Comments allowed

By Appraisersblogs

Excerpts: includes Fannie’s 1-page “Standardized Property Measuring Guidelines” with good information.

Does following ANSI even reflect the market? Perhaps, adopting the ANSI standard will make the description of the subject property more precise. However, how is this going to help if Realtors, assessors, builders, and architects are not measuring by the same standard? Will this create a false sense of accuracy? Will there be a lot more discrepancies once the ANSI measuring standard is used by appraisers for the subject property while different measuring standards measure the comparable sales. And how do we apply the ANSI measuring standard on exterior-only appraisals, desktops, hybrids, and 2055s?

This blog post is a good place to read comments and leave your own. Over 35 comments. Click here to read.

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Fannie Mae to Adopt ANSI Measurement Standard in 2022

Short blog post with good info

By: Dan Bradley (McKissock)

Excerpt: ANSI Z765 is a copyrighted document. A downloadable PDF is available for purchase from Home Innovation Research Labs for $25.00. The website can be accessed here: https://www.homeinnovation.com/z765.

To read more, click here

Why Don’t Real Estate Agents Measure Houses? Appraiser Humor

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Residential Appraisal Errors

Appraisal Errors from Reviewers and State Boards

By Ann O'Rourke on December 17, 2021 / appraisal, bias, Fannie / Leave a comment

Tags: appraisal, bias, Fannie

25 Common Errors in Appraisal Reports

Excerpts: As a real estate appraiser, much of your success relies on your reputation as a competent professional. Unfortunately, certain appraisal violations are quite common—including errors in appraisal reports. Make sure you’re aware of these mistakes so that you can avoid them. Here’s a compilation of the most common errors and deficiencies found in appraisal reports by reviewers, regulators, and appraisal boards.

Not stating the report option utilized.
Not providing enough analysis for the intended user or reader to understand the report properly.
Inconsistencies between the description of the subject property in the improvements section and the photographs, sketch, sales comparison grid, and other areas in the report.
Inappropriate use of boilerplate commentary in the appraisal report to describe the neighborhood or to explain the reconciliation of the sales comparison approach.
Failure to summarize the support and rationale that supports the highest and best use opinion.
Not complying with the most current USPAP.
Failure to explain the exclusion of the cost and or income approaches.

To read more, click here

My comments: This was originally published by McKissock in 2019 and updated in 2020. We can always use these reminders. We know them, but sometimes forget to do them, update templates, boilerplate, etc.

What is “retirement” for appraisers?Appraisal Business Tips

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Appraisals Obsolete Now or Later?

By Ann O'Rourke on December 3, 2021 / appraisal business, Fannie, FHA, liability, zillow / Leave a comment

Tags: appraisal business, Fannie, FHA, liability, zillow

Is Appraisal Obsolete?

By George Dell SRA, MAI, ASA, CRE

Excerpt: Obsolete! Such a harsh word. Can it be?

Is the problem convolution?

Does it mean I will soon be obsolete? Not needed? Not loved? Terrible. What can be done?

Yet all the little signs are pointing that way. “Automated” valuation models have much of the market, and continue to gain. Other valuation methods and appraisal exempted transactions continue to grow. Evaluations, desktops, hybrids, auto-measurements, non-appraiser inspections, broker opinions.

To read more, click here

My comment: Another different perspective from George Dell! Check out “Appraisal startup Aloft closes $20M Series A” above! Not the first, and not the last, appraisal-related company to get millions in funding. Who needs experienced field appraisers when we have AVMs, hybrids, etc.?

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